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ary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. Ignore income taxes in this problem.) The data pertaining to her investment opportunity are: Cost of equipment                                                 $ 175,000 Working capital needed                                        $ 185,000 Annual cash inflow from sales                             $ 190,000 Annual cash outflow for operating costs              $ 145,000 Salvage value of equipment                                 $   20,000  Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the present value factor you will use for the net annual cash flows?

ary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. Ignore income taxes in this problem.) The data pertaining to her investment opportunity are: Cost of equipment                                                 $ 175,000 Working capital needed                                        $ 185,000 Annual cash inflow from sales                             $ 190,000 Annual cash outflow for operating costs              $ 145,000 Salvage value of equipment                                 $   20,000  Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. What is the present value factor you will use for the net annual cash flows?

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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ary is considering opening a hobby and craft store. Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment. Ignore income taxes in this problem.) The data pertaining to her investment opportunity are:

Cost of equipment                                                 $ 175,000

Working capital needed                                        $ 185,000

Annual cash inflow from sales                             $ 190,000

Annual cash outflow for operating costs              $ 145,000

Salvage value of equipment                                 $   20,000

 Mary plans to operate the business for six years. Mary requires a minimum 6% return on this investment.

What is the present value factor you will use for the net annual cash flows?

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Present value refers to the current worth of a sum that is receivable in the future. 

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